Dow Hits Another Record, but Lumber Liquidators and Fresh Market Tumble

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You wouldn't be remiss to think a rising stock market is now one of life's guarantees alongside death and taxes. Week after week this year, stocks have moved inexorably higher, despite a weak economy, the government's recurring inability to make the most basic decisions, and federal spending cuts. Today, the S&P 500 closed above 1,800 for the first time today, and the Dow Jones Industrial Average (DJINDICES: ^DJI  ) moved further into uncharted territory north of 16,000, both scoring their seventh straight weekly gains. Even the Nasdaq is less than a percentage point from hitting 4,000, after gaining more than 30% this year. Yesterday's enthusiasm about Janet Yellen's preliminary confirmation and a strong unemployment claims report seemed to carry over to today, lifting the S&P 500 0.5% and the Dow up 0.3%.

Despite the broad market gains, not every stock was a winner today. Shares of Lumber Liquidators (NYSE: LL  ) were getting taken to the woodshed, falling 12% after Whitney Tilson, head of the Kase Capital Management hedge fund, announced a short position in the high-flying wood-flooring specialist. At an investor conference, Tilson noted a government investigation into potentially illegal timber imports by Lumber Liquidators, and suggested the company's gross margins, which have improved to better than 40% lately, were too good to be true. The hedge fund manager also cited a report from the non-profit Environmental Investigative Agency that said Lumber Liquidators' purchases "have fueled rampant illegal logging in Eastern Russia." Shares of the flooring retailer had more than doubled this year before today's drop, riding the broader housing recovery.

The Fresh Market (NASDAQ: TFM  ) also took one on the chin, falling 19% after an across-the-board poor quarterly earnings report. The Whole Foods rival reported flat per-share profit growth at $0.23, missing estimates of $0.26. Sales also fell short, growing 13% to $364 million, and same-store sales improved only modestly by 3.1%. Management cited "increasingly challenging economic conditions" for the rough quarter, but the company's outlook also came up weak as the Fresh Market guided for full-year EPS of $1.42.-$1.47, below the consensus at $1.53. For a company that calls itself "high growth" and a stock that's priced similarly, Fresh Market will need bottom-line growth above 10% to keep shares from falling even more.

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